Disney Announces It Is Pulling Movies From Netflix; Will Launch Streaming Service

Disney served a big surprise moments ago when it reported reported Q3 revenue of $14.24 bn that missed the average analyst estimate, $14.42, even as Q3 EPS of $1.58, above the $1.55 expected.  That was not the surprise: what was is that Bob Iger's entertainment giant just made what was until recently a simmering war with Netflix, hot when the firm announced it would end its streaming act with Netflix, pulling its new release movies starting in calendar 2019, and instead it would launch it own ESPN direct-to-customer video streaming service in 2018.

The platform which will feature about 10,000 sporting events each year, will have content from the MLB, NHL, MLS, collegiate sports and tennis' Grand Slam events.

The announcement from Disney, which is now hoping to become more of a streaming company like Netflix, comes at a time when Netflix is spending billions of dollars on content, and is hoping to become more of a programming company like Disney.

From the press release:

The Walt Disney Company today announced that it has agreed to acquire majority ownership of BAMTech, LLC and will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019.

 

Under terms of the transaction, Disney will pay $1.58 billion to acquire an additional 42% stake in BAMTech—a global leader in direct-to-consumer streaming technology and marketing services, data analytics, and commerce management—from MLBAM, the interactive media and Internet company of Major League Baseball. Disney previously acquired a 33% stake in BAMTech under an agreement that included an option to acquire a majority stake over several years, and today’s announcement marks an acceleration of that timetable for controlling ownership.

 

The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the Company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”

 

The ESPN-branded multi-sport service will offer a robust array of sports programming, featuring approximately 10,000 live regional, national, and international games and events a year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis, and college sports. Individual sport packages will also be available for purchase, including MLB.TV, NHL.TV and MLS Live.

 

With this strategic shift, Disney will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar year theatrical slate.

 

Plans are for the Disney and ESPN streaming services to be available for purchase directly from Disney and ESPN, in app stores, and from authorized MVPDs.

The announcement has sent both its and NFLX's shares tumbling.

Meanwhile, for those interested, this is what else DIS reported, courtesy of Bloomberg:

  • 3Q Cable Networks operating profit $1.46 billion, estimate $1.59 billion (Bloomberg News, average of 3)
  • 3Q Cable Networks revenue $4.09 billion, estimate $4.16 billion
  • 3Q media networks revenue $5.87 billion, estimate $5.88 billion
  • 3Q parks & resorts revenue $4.89 billion, estimate $4.83 billion
  • 3Q studio entertainment revenue $2.39 billion, estimate $2.34 billion
  • 3Q consumer/interactive revenue $1.09 billion, estimate $1.23 billion
  • 3Q media networks operating income $1.84 billion, estimate $1.96 billion
  • 3Q parks & resorts operating income $1.17 billion, estimate $1.11 billion
  • 3Q studio entertainment operating income $639 million, estimate $642 million
  • 3Q consumer/interactive operating income $362 million, estimate $376 million

Comments

Michael Musashi izzee Tue, 08/08/2017 - 23:53 Permalink

All these streaming services will eat themselves. People want a clean neat package, and they don't want to shell out big bucks for it. I have Netflix for the kids, but that's all they get. They only watch an hour a day, if that, so no one complains.Streaming service is just cable TV busted into 100 pieces, only the strong will survive.  

In reply to by izzee

besnook Shitonya Serfs Tue, 08/08/2017 - 16:30 Permalink

i have an indoor antenna that puts 14 channels on my tv and i only really need it for local news and a coupla hours/week of idle boredom. i have hulu, netflix and amazon for the kids and wife. i don't watch sports anymore because it is all about cheating for money and politics. disney is just as responsible as the rest of the media companies for making media a giant wasteland of mental numbness.

In reply to by Shitonya Serfs

exi1ed0ne besnook Tue, 08/08/2017 - 16:47 Permalink

Throw the shit out the window. 15 min of content and 15 min of seizure enduing advertisements is not worth wasting electrons with.  I enjoy streaming, but god damn the fracturing of content across several services is going to be the death knell for it. Want to watch Game of Whores?  Get the GoW streaming app.  Just as expensive as a DVD, only per MONTH!Fuck off already Hollywood.

In reply to by besnook

Shitonya Serfs NDXTrader Tue, 08/08/2017 - 16:41 Permalink

Or pick nothing at all. Or watch the old DVDs. Or use the pirate services and watch movies that are in the theater (don't mind the shadows walking in front of the camera recording).

Disney used to have monopoly on their content and now with its brand dying thanks to the cost of its services and arabs, indians, and tacos running around the amusement parks....no thanks.

In reply to by NDXTrader

Long-John-Silver SloMoe Tue, 08/08/2017 - 17:30 Permalink

ESPN without a tie to Cable and Satellite TV subscriptions will effectively end Cable and Satellite TV. People will be free to cut the cord and only pay for Internet service. With a Cable or Satellite TV subscription running well over $100 a month switching to Disney streaming and dumping all those other channels no one watches for the Sports you watched on ESPN will be very easy. Disney is already on ROKU Streaming Boxes so adding ESPN will be easy. Then you have over 5,000 free channels on ROKU to fill in between games.

In reply to by SloMoe

NoWayJose Tue, 08/08/2017 - 16:23 Permalink

Repeating the mistakes of cable. Everyone doing their own thing until cable cost $200 a month with different add on packages. Then people cut the cord. So if you want a half dozen channels of streaming you will still pay $200! Or drop it altogether!

Long-John-Silver NoWayJose Tue, 08/08/2017 - 17:46 Permalink

You are assuming everyone switching from Cable/Satellite TV would subscribe to all those channels. 99% only watch 5 or fewer channels of the a little over 100 they currently get. Most of those channels are garbage and would never survive as a subscription streaming channel. If they run commercials and charge a subscription no one that streams will pay for it. Sling has discovered that and so have never had enough subscriptions to make a profit. The only way they would survive as a streaming (IPTV) internet channel is to make the channel free like Crackle or drop all the commercials like Netflix. To be honest most of their content is so poor from decades of no competition programming no one would watch even if they provided a free channel. I dropped Netflix when XTV became available because it's much better and best of all it's free. I do contribute a few bucks as the person that operates it takes donations for it's support. XTV is such a great channel someone could be very happy having that one channel on my ROKU menu with it's hundreds of high quality free IPTV sub-channels.

In reply to by NoWayJose

LawsofPhysics Tue, 08/08/2017 - 16:26 Permalink

Well.  I will say that one common problem that explains all the bullshit in today's world, far too many overcompensated useless paper-pushing middlmen... Although, I don't necessarily know if the folks at disney will be any better at this business.  I guess it comes down to who owns the transmission network.  Better "rebalance" my communication stocks...

quesnay Tue, 08/08/2017 - 16:28 Permalink

Ugh. Soon there will be 10 different steaming services all with exclusive rights to different crap.Well back to bit-torrent it is then. When it was all in one place, it was just easier to pay for it.

Karl Marxist Tue, 08/08/2017 - 16:30 Permalink

The Pedophile/homo Jewish attorney run Disney is setting itself up for their great demise. Didn't ABC, Disney owned, learn it's lesson from ESPN's demise? Stupid Jewish attorneys.

chosen (not verified) Tue, 08/08/2017 - 16:36 Permalink

Most of Disney is crap.   ESPN is complete crap.  Netflix movie selection is crap.    Not interested in crap.

NDXTrader Tue, 08/08/2017 - 16:36 Permalink

All Disney has to do is promise some new Star Wars, Marvel, Frozen, Lion King, etc. content and they will have 5 million people signed up to stream in a week. Smart move

Father ¢hristmas (not verified) Tue, 08/08/2017 - 16:41 Permalink

"MLB, NHL, MLS, collegiate sports and tennis' Grand Slam events."White boy shit.